Dropped balls

I dug through some old files recently and found that I've been talking about the merits of plug-in hybrids for thirteen years.[1]

(pause)

That's a fairly long time. It's three design cycles in the auto industry, maybe four. It's I don't know how many rounds at various boards and bureaus. Six and a half Congresses. However you measure it, it's plenty of time to get something done.

For at least thirteen years[2] (assuming that these folks hadn't figured it out themselves before that), Federal and state policy makers and auto companies have known - have to have known - about the feasibility of partial grid power for vehicles and the substantial if not complete freedom from petroleum that they would allow. The auto companies had to know it, because their own engineers were talking about it. I was one of them.

Yet every time the opportunity came to them, they dropped the ball.

Thirteen years have passed. Yet nothing was done: the California Air Resources Board deliberately passed up the opportunity in favor of a ZEV mandate requiring
batteries which are still not available (and now that battery technology is just about to get there, fumbled the ball again just two years ago); the Clinton administration promoted 80-MPG passenger sedans but didn't do anything about petroleum independence;
and Bush's hydrogen vehicle program has nothing now and may never yield
anything. (Update after concept but before completion: the administration knew it would not yield anything in time; more on that later.)

Today the bill is coming due. Oil supplies are tight up against demand, and price spikes seem inevitable. Yet despite the decade-plus of time we've had to take action, and the nearly four years of notice we've had since 9/11 that something had to be done.... our transportation network still runs almost entirely on petroleum. Even if there is never an interruption in supply, escalating prices can do untold damage to our economy and livelihoods (not to mention the hazard of financing religious radicals sworn to kill us).

One thing is certain: if we drop the ball this time, we are not likely to get another chance.

[1] Wagers on whether I can prove it are welcome. Money, good liquor, whatever...[2] Or maybe 26 years. The 1979 Mother Earth News article about the Opel conversion arguably counts, but policy makers can probably be forgiven for discounting the source.
¶ 6/11/2005 06:31:00 PM

CARB's erstwhile ZEV mandate was not based on economics; it was supposedly for pollution abatement. Allowing partial credit for GO-HEV's... that would have been economics.

We're rapidly approaching the point where GO-HEV's are economically sensible, and previous expenditures could have put us in the position to have 100K/yr production of them whenever it made economic (or geopolitical) sense to have them... except we dropped the ball and have much farther to go.

"We" in this case are variously the policy makers of CARB, the USA, and the people who live under and with those policies. The economics are pretty much the same for everyone, so "we" applies to the nation as a whole.

Allowing partial credit for GO-HEV's would have been pollution abatement: just like electric vehicles, it would have moved emissions to power plants, which are far from urban centers, and much less polluting.

One nice thing about Toyota's and Ford's hybrid technology: it appears to allow retrofitting to plug-in status. Hybrids in general, and Toyota's and Ford's in particular, seem to be doubling annually. In a few years there will be a large installed base. If conversions really are feasible, that would make possible a very fast response to a real spike in prices.

The doubling every year is good, but it is still beginning much too late for comfort. The USA would have been much better off today if we had settled for 10,000 a year increasing at 25% per year, only starting in 1995.

EP: if the price of "getting it right" is a step toward a command economy, count me out. I mean, really, we have an energy policy; you disagree with it. Want to change it? Easy: all you have to do is become president.

The essence of democracy is that we the people have to take responsibility. One of the key ways is for voters to ensure, through their governments, that free markets include ALL the costs for energy options. Free markets are only efficient when they account for all costs, in this case especially the costs of pollution.

This is the way market conservatives and greens can come together and fight pollution. Of course, it requires market conservatives to be honest about the costs of pollution, instead of going into denial....

And voters have to support politicians who want to tax polluting energy sources, and subsidize clean ones...

Indeed, we're paying huge amounts of money to protect the al-Saud money machine. All the better reason to treat petroleum as an evil that is necessary for the moment, but not permanently.

Rob: There is a difference between the politically-popular subsidies for corn ethanol, the less-popular subsidy for wind power and the lack of subsidy for high-mileage or plug-in hybrid vehicles. Ethanol from corn will always require subsidies, wind power will shortly be competitive without subsidies, and a manufacturer of GO-HEV's with 10 years of experience would probably be competitive today without subsidies.

Your point is that you disagree with the way government gets involved with energy decisions. My point is that getting government involved has resulted in the present mess, and that such involvement will always end up with an undesirable trainwreck.

Nick -- you say that "we the people" have to take responsibility for every decision our idiot congressmen make? Which decision should we fire them for? Recent studies indicate that politicians win or lose elections based on their looks. Those who have an itch to get the state involved in rational decision making need to remember that there are plenty of decisions higher up on their agenda than energy at reelection time, including mostly meaningless ones like whether the Ten Commandments should be allowed in a public space, or certain naughty words ought to be spoken on the public airwaves, and so on. Expecting rationality from this process is to expect a large gusher of oil to appear in your front yard tomorrow.

hmm. Rob, this is certainly a large topic. I'll have to think about it.

Let me say, however, that while I understand you're being discouraged by how government works, I don't see an alternative to speaking up for the right policies. Government IS deeply involved, and someone has to push for better policies.

As a separate thought, I think government has to be involved. Even the strictest libertarian should, I think, agree that pollution creates the kinds of harm that government has to protect people from (based on the libertarian idea that government should protect people from fraud, theft and violence). Without goverment, people can just dump their pollution on each other...

Rob, would you agree or disagree that the PNGV was a government program which would have contributed something to getting OUT of this mess?

I despise the government programs which aggravate the problems they purport to solve, or create problems as part and parcel of giving windfalls to some special interest. I don't see a way to get rid of these programs quickly or easily.

I do see a way to offset some of the damage with other government actions.

Am I wrong for not throwing my hands in the air and saying "We're doomed"?

No, EP -- I simply find your simple faith in more government intervention to be historically unlikely. Getting back to the business at hand, politicians have one overarching goal in mind at the end of the day:

1) Get reelected.

If they don't do that, they fail to do anything else. How do they get reelected? With money. Who has a lot of money? Oil companies. If you want to understand why we're in the mess we're in, this is the deal with the devil the government makes all the time. (Not that oil companies are necessarily the devil, but this is a simple matter of Bismarckian realpolitik.) This is ultimately the problem with government involvement and all the schemes that begin with the two words, "we should": they assume

1) enlightenment that is unlikely to appear due to political realities2) unwarranted control over private resources that does not exist

I've written at some length about the former, but let's say the latter also comes into play. Let's say for this thought experiment that it costs, in 1995 terms, a billion dollars to launch a completely new car line. (I don't know how much it really does cost, but for the moment substitute "a billion dollars" for "a big, non-trivial amount of money".) Explain to me what credibility the Engineer-Poet has to wisely manage that extremely large amount of money for a project with a fairly long-term payoff in an era of cheap gas prices. (I'm not picking on you in particular here, EP, I'm just using your name to put specificity on this example.) My point is that going back ten years, you couldn't have found anybody seriously willing to bring such vehicles to market.

Now, there was a good bit of research going on, but nobody apparently thought it of sufficient interest to commercialize; instead, all the carmakers including the Japanese went for bigger cars and increasingly to SUVs. There simply wasn't any evidence that the market was heading to smaller cars -- quite the opposite. Only Toyota, who gets credit for the decision, decided to continue with hybrid development. And even Toyota thought the Prius would be a niche vehicle, as witness their surprise by its sudden sales boom. But you can certainly see, given the circumstances, how the carmakers ended up where they did.

Re EP's question ("would you agree or disagree that the PNGV was a government program which would have contributed something to getting OUT of this mess?"): Possibly; it depends on a lot of other things that have nothing to do with the program itself.

Regarding the necessity of the government being involved: well, I'll tell you this much: those with money on the line will be sure to spend something on it. Those who don't (immediately) will find themselves screwed by the legislature. The energy policy we have is precisely a result of that process. Expecting something different is naive in the extreme.

You can buy a lot of advertising, and a lot of lobbyists, but (mostly) you can't buy votes. The public is sadly uninformed and vulnerable to manipulation, but there is a limit: Gore did win the popular vote, after all, and was a whisker away from winning the electoral vote.

On the marriage metaphor: you can't divorce government. You wouldn't even want to. You just need to make it better. Don't foget, without government you wouldn't have nuclear power, the internet, interstate highways, railroads, major airports,and the new world would have been discovered about 150 years later.

I guess my basic question to Rob would be: what action do you suggest?

EP: Well, not in front of that court, anyway! What I continue to be amazed by, though, is the blind faith that commercially viable processes will come though government intervention. How? I just don't see it. So many say, ah, we got a man on the moon, we can therefore do X, where X is some large, expensive, difficult thing. Whether it's ending foreign oil dependence or poverty, the answer seems to keep coming back the same: this isn't working.

As to what action I would suggest, Nick, well, how much money do you have?

One additional comment: how, exactly, are you going to make government better? Are you going to put your own guy in charge? But won't he be subject to the same political tugs that got Jimmy Carter diselected? Too many things to go wrong: the guy becomes corrupted by all the compromises he has to make once he gets into office, or he becomes unelectable because he has too many principles (usually, one is enough), or the electorate becomes disinterested...

Make government better? All I really want it to do is stop doing some of the destructive things it's doing, e.g. financing oil-related environmental and defense costs from income taxes instead of fuel taxes, preventing necessary change by over-regulation and protection of rentiers, deceiving the public about the future and even the present.

I've named some government actions which would have created huge beneficial changes if they had gone just a little differently (the CARB ZEV mandate). Doesn't that count for anything in your book?

As for commercially viable processes: there are a great many things which are technically feasible but commercial viability depends on market conditions. If an industry has the advantage of tax subsidies or regulatory barriers to market entry, the commercial viability of a competing technology may have almost nothing to do with how good it is.

All I really want it to do is stop doing some of the destructive things it's doing, e.g. financing oil-related environmental and defense costs from income taxes instead of fuel taxes, preventing necessary change by over-regulation and protection of rentiers, deceiving the public about the future and even the present.

This deception is due to political considerations. You would change this, how?

I've named some government actions which would have created huge beneficial changes if they had gone just a little differently (the CARB ZEV mandate). Doesn't that count for anything in your book?

No. Can I buy a ZEV vehicle? No? Could that be because nobody wanted one, and because the technology required tons of capital that no responsible corporate officer in his right mind could justify spending without adequate foreseeable reward? Yup.

If an industry has the advantage of tax subsidies or regulatory barriers to market entry, the commercial viability of a competing technology may have almost nothing to do with how good it is.

Yet another motivation for keeping government out of the business of determining winners and losers in energy and transportation. Governments will pick winners based on political considerations; markets will pick ones based on how they serve actual customers.

"This deception is due to political considerations. You would change this, how?"

I'm doing what I can to strip away the masks. It's a major purpose of this blog.

"Can I buy a ZEV vehicle? No? Could that be because nobody wanted one...?"

Try "because the major auto companies which made them refused to allow people to buy them, and destroyed them rather than let them be purchased by the public." This applies to the GM EV-1, the electric Ford Ranger, and the Toyota RAV-4 EV. I seem to recall reading about some people who were allowed to buy their RAV-4's.

"Yet another motivation for keeping government out of the business of determining winners and losers in energy and transportation."

If I could swap all these other programs and preferences for a $2/gallon gasoline tax, phasing to a general tax on fossil carbon, I'd do it in an heartbeat. It's not going to happen; rather than settle for nothing, I support the best of the possibilities actually on the table, just like I design around the components I can get rather than what's ideal for the task.